The Sad Facts on Trading - page 3
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Ok as I indicated yesterday I want to try this for a while and see how it goes. Some questions may be pertinent to you at the time others perhaps not. We can always do with a reminder though from time to time
“Hi Chri
Writing to you in desperation! I generally follow James’ G7 system, so entry points have become very clear to me. The part that I’m battling with is when to exit a trade. I’ve had so many instances when I have held on to a trade only to find it turn on me and worst case scenario hit my SL. So now I’m afraid to stay in trades. I always seems to get out of beautiful big winning trades (in hindsight of course!) way too ea
I understand aiming for fibs/ S/R lines etc but still battle to stay in trades and let price go to these areas. As soon as I think the trade is looking dodgy I close it for a small profit only to kick myself later when I see I could have attained 100+ pips. I always trade with a SL and I always set a reasonable and logical TP. How do I know when to let the trade run to TP and when to bail? Another thing……….do you only ever manually close your trades/check your trades at the top of the hour? How do you manage your trades? Please hel
Trader C.
My reply was
Hi C, you must not beat yourself up to much. If you watch James in the charter group, he does this himself all the time – BUT – you don’t notice because he doesn’t mention it. The reason is that, as with predicting anything, one cannot predict an exit anymore then you can predict any other aspect of trading. So, you have to learn to take what you get, as long as you have done your best to figure out the best possible and most logical exit areas, and aimed for those, then there is simply nothing else to do. Whatever ‘actually’ happens during the trade then is not your doing and therefore nothing that you need stress
James for example, is comfortable with his trading and understands these variables better then most – so he takes what he gets and moves on – he doesn’t waste any energy on “what if” scena
There are various options available, but it sounds as if you are familiar with most so I won’t go into them, but purely for a reference point think of some of these scenarios and I bet that you can identify with them all
If you were to use a trailing stop for example – you will find that quite often you are just stopped out by just a few pips by a slightly bigger retrace then normal, and the price does then eventually hit your profit target. If you wait for a retrace and hide behind the next low, then you can quite often find the market actually reverse and you are way down on profit before you realise that maybe that was a reversal candle and so perhaps you should have gotten out at the top near that resistance area. Quite often it simply does not get to the next level at all. More often then not, it does though, and so just take the ones you get and move on from those that you don’t ge
Can you see the conflict? It really is not a science at all. You need to try the various options available to you and then monitor which gives you better results, knowing full well that at times, another strategy might have given more. You need to find the exit strategy that you are most comfortable with and simply stick to that. Or, if you are experienced enough, then depending on the market conditions, you may want to use a different strategy at times under different market conditions. The last point though is not advisable unless you are experienced and quite comfortable with the outcome. If you attempt this too early in your trading career then once again you will find yourself questioning whether that was the right decision at the time – as you are doing now
Rules are rules and variables are variables – just remember this. There is nothing wrong with placing a 20 pip stop loss today and a 50 pip tomorrow. As long as you have applied your rules of the stop being within the same ‘risk parameters’…in other words if you need a larger stop then adjust your number of lots traded so that you are within the same risk exposure parameters as laid out in your rules…but the variables of actual ‘size of stops’ – that is always dependent on market conditions (last obvious l
I hope that this enables you to start accepting the inevitable – that you cannot be right all the time – and that you cannot control the outcome – ev
Just learn to go with the flow more this year – accept the outcome and move on – take the good ones and along with those – learn to take the bad ones as wel
Cheers,
Chris.
P.S. Remember the basic rules of exiting a trade
Jan12th
IMPORTANT: This free report is not an express or implied recommendation, guidance or proposal that any particular Forex analysis or trade is appropriate to the particular investment objectives, financial situation or particular needs of any recipient.
EUR/USD
Weekly Trend direction:
Bearish
Weekly trend reversal level: 1.3450
Key G7 resistance levels:
1.3000, 1.3050/80, 1.3150/80, 1.3220, 1.3300
Counter-trend opportunities:
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today's trade suggestion:
After a long decline in the Euro during the holiday weeks, the weekly direction has turned bearish. This means that we are looking to sell the euro into rallies this week, whilst below the weekly reversal level at 1.3450. First resistance is at 1.3000, roughly where the price is currently hovering. However, there are no clear signs of reversal at this stage. Watch and wait over the coming hours. If 1.3000 doesn’t hold, expect the euro to move higher to 1.3050/80 and higher before reversing. As always watch for clear signs of reversal and a G7 entry trigger before selling. First target for short positions is 1.2850
Summary:
Sell rallies to resistance levels after a clear G7 entry signal. Target 1.2850 and then 1.2700
GBP/USD
Weekly Trend direction:
Bullish
Weekly trend reversal level:
1.5350
Key G7 resistance levels:
1.5540, 1.5500, 1.5460/30, 1.5400/20
Counter-trend opportunities:
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal
Today's trade suggestion:
Last week, the pound formed an “inside week” in comparison to the previous week. This is viewed as a continuation pattern, which means that we remain bullish. This pair has really made a meal of it over the holiday weeks, with random fluctuations within a large range, making it difficult to identify clear support levels. Nevertheless, we have penciled in several black lines and a Fibonacci analysis and determined rough areas of support which we will be watching this week. Continue to look to buy into dips, but be aware that the chart is messy and potentially misleading. It is possibly better to remain sidelined until we see cleaner patterns and more direction on the chart. Support levels are listed abov
Summary:
Buy dips to support levels after a clear G7 entry signal. Be somewhat sceptical of the pounds intentions this week!
Forex-Science Daily Report 27 January 2011
EUR/USD
Weekly Trend direction: Bullish
Weekly trend reversal level: 1.3244
Key G7 support levels: 1.3400, 1.3450, 1.3530, 1.3580, 1.3650
Counter-trend opportunities:
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.
Today’s trade suggestion
It’s hard not to become frustrated with the euro’s behaviour over the past two weeks, with the ambling rally providing little opportunity for buying, and counter-trend trades mostly fizzling out at break-even. The weekly direction remains firmly bullish. However, there are small signs of momentum loss, and a developing “rising wedge” means that the rally could be nearing an end. Note also that the hourly chart is overbought and we have had repeated failure to reach the upper Bollinger bands over the last 2 days. Also note on the weekly chart that we have reached a long term 61.8% Fibonacci resistance level. Support levels are a fair distance below us, and as there are unlikely to any trend direction trades for most of today, we may well look to sell into a clear sign of reversal if and when it happens. January often provides excellent trading opportunities, but these have definitely Not materialised
Summary:
Look to buy the euro into dips later in the day or on Friday, if and when we get a G7 opportunity. Possibly sell into a reversal at the rising wedge, making sure that the stops are tight.
GBP/USD
Weekly Trend direction: Mixed
Weekly trend reversal level: 1.5836
Key G7 support levels: -
Counter-trend opportunities:
Strategy: Stay out
Today’s trade suggestion
Unlike the euro’s ambling moves higher, Cable has demonstrated that it’s still capable of dramatic surprises. Tuesday’s drop of well over 200 pips in a matter of a few hours will have triggered a lot of stops situated below 1.5950, and reversed some of the bullish sentiment dominating the market. However, it has turned out to be short-lived and we are almost back up to 1.5950 where the collapse began. The drop sliced through the weekly reversal level, moving G7 trading on the pound to
sidelines for the rest of this week. Perhaps it’s just as well. The next two days may be just as volatile with bulls and bears jostling for dominance to end the first month of 2011 and to set the scene for the first quarter. (P.S. Pattern traders will notice the weekly “Head and Shoulder” patte
Summary:
Stay sidelined.
The sad fact is that most traders fail to make money, or even survive the first few months of trading due to two factors: 1. A poor trading system. 2. Poor money management We can provide the first one for you – that’s the easy part! However, the second part is even more important and I want to show you what you can achieve if you do things the right way and if you follow a systematic money management approac I have prepared some Excel spreadsheets to show you how you can convert your small trading account into a substantial sum of money if you have a profitable trading system or profitable signals and if you know the three Keys to making money in Forex trading. But before we go through the spreadsheets, let’s briefly cover the three Keys to making money in trading Forex Key number 1: Managing risk per trade Key number 2: Managing risk per account Key number 3: Compounding profits Ok, so let’s go through these keys one at a time. Let’s say you were able to get your hands on a profitable trading system or someone was willing to send you profitable trade alert Would this mean that you would automatically make money trading your account? No way! The problem is that, as hard as it is to learn how to trade the market, it is even harder for most people to manage their account. This is mainly due to inexperience and wrong, emotional decisions. I can’t help with the emotional side (although there are some excellent books on the psychology of trading at available, but what I can help you with is gaining experience in converting a winning trade system or signals into money in the bank. It’s all about money management Key number 1: Managing risk per trade Trading involves risk. Every trade we take has a chance of being a winner and a chance of being a loser. There is simply nothing that will ever change that No-one knows where the market will go next with certainty. What we can do is to develop systems which give us an edge of better than 50:50, and the systems we use win about 65-70% of the time. The other 30-35% of the time the trades are losers. This does not make the losing trades bad trades, but it simply means that the trades fell into the “good, but losing” group When a trade goes against us, the best thing to do is to close the trade for a relatively small loss and to wait for the next opportunity. Many novice traders tend to hold onto losing trades, or even add to losing positions. This has a terrible effect on your account equity, risk of losing more and your emotional well being. Anyway, I don’t want to dwell on this subject, but I must stress that if you follow a trading system or signal, follow it precisely. Do not risk more than the 30-50 pip stop loss employed and do not add to losing trades. More about that later Part Two will be posted here on Tuesday next week... This is part 1 of a 3 part series. If you would like this e-book sent to you directly, simply opt in on the traders-live site and you will receive this, along with another report or two and a complete video series. Cheers for now, Chris.
Hi Chris, All sound true, how do we get off the treadmill? can you help? particularly with a trading system to identify trades to enter. I think 70% success is great I am doing about 48 , you know where that leads.
Cheers
Rainer
Ok as I indicated yesterday I want to try this for a while and see how it goes. Some questions may be pertinent to you at the time others perhaps not. We can always do with a reminder though from time to time “Hi Chri Writing to you in desperation! I generally follow James’ G7 system, so entry points have become very clear to me. The part that I’m battling with is when to exit a trade. I’ve had so many instances when I have held on to a trade only to find it turn on me and worst case scenario hit my SL. So now I’m afraid to stay in trades. I always seems to get out of beautiful big winning trades (in hindsight of course!) way too ea I understand aiming for fibs/ S/R lines etc but still battle to stay in trades and let price go to these areas. As soon as I think the trade is looking dodgy I close it for a small profit only to kick myself later when I see I could have attained 100+ pips. I always trade with a SL and I always set a reasonable and logical TP. How do I know when to let the trade run to TP and when to bail? Another thing……….do you only ever manually close your trades/check your trades at the top of the hour? How do you manage your trades? Please hel Trader C. My reply was Hi C, you must not beat yourself up to much. If you watch James in the charter group, he does this himself all the time – BUT – you don’t notice because he doesn’t mention it. The reason is that, as with predicting anything, one cannot predict an exit anymore then you can predict any other aspect of trading. So, you have to learn to take what you get, as long as you have done your best to figure out the best possible and most logical exit areas, and aimed for those, then there is simply nothing else to do. Whatever ‘actually’ happens during the trade then is not your doing and therefore nothing that you need stress James for example, is comfortable with his trading and understands these variables better then most – so he takes what he gets and moves on – he doesn’t waste any energy on “what if” scena There are various options available, but it sounds as if you are familiar with most so I won’t go into them, but purely for a reference point think of some of these scenarios and I bet that you can identify with them all If you were to use a trailing stop for example – you will find that quite often you are just stopped out by just a few pips by a slightly bigger retrace then normal, and the price does then eventually hit your profit target. If you wait for a retrace and hide behind the next low, then you can quite often find the market actually reverse and you are way down on profit before you realise that maybe that was a reversal candle and so perhaps you should have gotten out at the top near that resistance area. Quite often it simply does not get to the next level at all. More often then not, it does though, and so just take the ones you get and move on from those that you don’t ge Can you see the conflict? It really is not a science at all. You need to try the various options available to you and then monitor which gives you better results, knowing full well that at times, another strategy might have given more. You need to find the exit strategy that you are most comfortable with and simply stick to that. Or, if you are experienced enough, then depending on the market conditions, you may want to use a different strategy at times under different market conditions. The last point though is not advisable unless you are experienced and quite comfortable with the outcome. If you attempt this too early in your trading career then once again you will find yourself questioning whether that was the right decision at the time – as you are doing now Rules are rules and variables are variables – just remember this. There is nothing wrong with placing a 20 pip stop loss today and a 50 pip tomorrow. As long as you have applied your rules of the stop being within the same ‘risk parameters’…in other words if you need a larger stop then adjust your number of lots traded so that you are within the same risk exposure parameters as laid out in your rules…but the variables of actual ‘size of stops’ – that is always dependent on market conditions (last obvious l I hope that this enables you to start accepting the inevitable – that you cannot be right all the time – and that you cannot control the outcome – ev Just learn to go with the flow more this year – accept the outcome and move on – take the good ones and along with those – learn to take the bad ones as wel Cheers, Chris. P.S. Remember the basic rules of exiting a trade
Interesting and yet a nice read for many. Keep up the nice work
Thanks Chris what you said makes sense, I will be looking for other tips in the future. I am determined to do well with trading.
cheers
Rainer
Sorry Guys been travelling so much lately. Here is a brief heads up of the longer term picture...
https://www.youtube.com/watch?v=k1ZUaQlKNNQ
Currency report - great set ups for today 2nd March...
https://www.youtube.com/watch?v=3KNndn9zT74
For daily analysis and trade commentary, create a separate thread in the Trading Journal forum. This thread would be closed if you continue to post unrelated daily commentaries here.